Economics is fundamentally unscientific. The economic crisis has speeded the shift of power to emergent economies. In Britain and the USA the theory of 'rational markets' removed controls from the finance sector, and things can still get yet worse. Read my book, No Confidence: The Brexit Vote and Economics - http://amzn.eu/ayGznkp

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Tuesday, 28 October 2014

Gideon Osborne thinks that he is very clever; and even he is impressed by his cleverness in orchestrating the announcement that many tens of billions of pounds are to be invested in infrastructure projects in the UK.

It was a principle of Political Economy that the primary function of an economy is to maintain its people to the highest possible level of comfort; and that this could only be assured in the future if enough of the national product was invested today. The principal reason why Political Economy was known as the 'dismal science' was because of its insistence on setting aside at least what was necessary for investment. That was an overriding constraint on consumption.

Gideon thinks he has pulled off the ultimate defiance of Political Economy, by continuing with growing payments for civil servants and beneficiaries of the welfare state. Normally this would mean that the infrastructure continued to decline and become more out-of-date. But the great genius is getting foreigners - and the Chinese in particular - to put just a little of their accumulated trade surplus into British railways and other essential systems.

The British users will have to pay the alien owners for the use of those services in perpetuity: the cash will syphon out of the country after direct costs have been met within the UK. The profit - which should be available for re-investment, had the projects been British-owned - will be allocable by the Chinese to whatever investments they deem appropriate, wherever in the world these occur. Given the balance of the British economy, this is likely to be a permanent situation.

Monday, 27 October 2014

The programme was concerned both with the man's character - obviously impeccable - and a widespread concern about large numbers of NON-EUROPEAN immigrants who are increasingly disinclined to assimilate to the British Democratic way of life. No concern at all was expressed about a 'flood' of EU migrants 'swamping' towns in the UK.

Politicians of all parties appear to be desperately anxious to focus on the NUMBER of European migrants; and to pretend that this numerical issue - and not the formation of ghettoes by determined aliens - is the matter of concern that voters place high on their list of concerns.

We have been shown with dramatic clarity that local government and the police concealed appalling crimes in order to avoid being seen as 'racist' or risking undermining 'multiculturalism'. The silence from the front benches of both houses of parliament on this deep issue is remarkable. Unless it is addressed properly and frankly, it will eventually explode.

Sunday, 26 October 2014

Gideon Osborne has been running around all year bragging about Britain's spectacular [relative] economic growth rate. This is contrasted especially with rates of growth in the EU, and even more specifically with the countries in the eurozone. Cameron has not been far behind in his boasting on the same point.

Now that this is transferred into a recalculation of the bill to be compliant with the obligation to contribute pro rata to the costs of the EU, the British government wants to deny that their country's economic performance justifies a bigger bill. This is an example of seriously shabby politics.

But there is an even more worrying aspect to this situation. If Cameron thinks that by putting on a fake show of anger he will impress anybody, he is sorely deceived; but if he genuinely was as angry as he seemed to be during the past week that is truly alarming. A man with such infantile tantrums should not be allowed to drive a car, let alone conduct the affairs of a great country. Over the past 300 years virtually all the powers of the Crown have come to be exercised by the prime minister, along with several new powers that never resided in the monarch. Such an aggregation of power can only safely be managed with modesty and calm deliberation: it would appear that Cameron has shown himself quite unfit for office.

Friday, 24 October 2014

In a brief soundbite this morning, Nigel Farrage said it all. David Cameron has absolutely no discretion about paying the new sum of contribution demanded by the EU from the UK. Cameron's Tory predecessors Heath, Thatcher and Major took Britain deeper and deeper into the Union: this is only a Tory achievement. The country is in the club. The rules are the rules. Nine countries have had bill increases; nineteen have had rebates; each country has one vote: so the logic is inescapable.

Where does this calculation come from? From the Commission, acting on the basis of economic statistics. Prostitution, drugs trading and some other illicit activities are now counted in national income figures, so Britain's officially-recorded turnover has been inflated - and this is counted back to 1995. In most years between 1995 to 2008 Britain was booming, relative to many European countries; and in the past two years recorded growth has exceeded other EU countries. When all the data are aggregated, Britain is credited with greater economic turnover than was formerly recognised; while other countries' results are scaled down: the arithmetic is unassailable, given the parameters within which it is computed.

Cameron can only make a bigger fool of himself by continuing the anger game that is already a national embarrassment.

This incident demonstrates Britain's impotence very clearly. The chances of pulling the country out of the EU without massive economic and constitutional damage are nil. Cameron's re-negotiation is most unlikely to happen, because his chance of gaining power in the next General Election is diminishing daily. But if it did happen, it could not make any significant changes to Britain's role or status in the Union: while the risks attendant on departure from the Union would starkly be revealed.

I was an active member of the GET BRITAIN OUT campaign in the one referendum we have had. I loathe the bureaucracy and the interventionism of Brussels, and the passage of so much unnecessary legislation cast in alien legal forms. I desperately wish that we were an Associate, and not a Member of the Union: but that is pipedreaming. We are in, up to our collective neck; and there is no easy way out.

Friday, 17 October 2014

The Chief Constable of Greater Manchester has rightly been pilloried this week for admitting that his force has been inadequate in persuing cases of abuse and rape of children by gangs, mostly composed of ethnic-minority men.

One part of his interview that has generally been ignored by the press has been his suggestion that the way the courts are managed means that it is extremely difficult to get convictions. The young people who have been victimised are unsophisticated and largely inarticulate; so defending Counsel have scant difficulty is demolishing their evidence.

But that is surely the greater offence. The adversarial court system works diirectly against the weak. The Bar - supposedly one of the greatest professions - is at its raw edge a vicious racket. Judges, almost all of whom are drawn from the ranks of Barristers, are tolerant of behaviour by their colleagues that amounts to a denial of justice to the victims of abuse.

All the great talk about the 'glory' of English [and Welsh] Justice is fundamentally false. As long as the self-opinionated great men [and women] of the profession fail to recognise quite how disgraceful is the habitual conduct of some of their colleagues they will not earn the respect of their fellow citizens. Charles Dickens recognised the fundamental rottenness of the judical system almost two centuries ago: and nothing has improved since then.

Tuesday, 14 October 2014

Yesterday it was confirmed that the UK government hoped to get around £300 million from a sale of its 40% stake in Eurostar. The money is supposedly being used to 'reduce the deficit' [presumably they actually mean the state's accumulated debt] - which was increased by billions just a few months ago when the EU insisted that Network Rail's debt should be added to the national aggregate. It is now likely that either in the immediate future, or a few years down the line, the whole ownership of the cross-channel link will pass into foreign hands. That doesn't seem to worry the government, which has allowed alien takeovers of British brands in the food and drink sectors worth over £4 billion in the past year alone. The fact that British buyers of the affected brands will be paying toll to aliens in perpetuity is of no consideration.

Today it is announced that people over 55 years of age will be able to draw from their accumulated 'pension pots' as often as they like, to whatever extent they like, provided they pay their marginal rate of income tax on 75% of what they draw. No doubt the unstated objective is to encourage people to draw down - and spend - some money between now and the election in May next year, and thus inflate the fake boom that is being engineered. As most 'pension pots' are too small to provide a decent supplement to the state old-age pension if they are held in reserve until retirement [the date for which is being pushed back] the probability that future pensioners will be abjectly dependent on the state pension and the benefits system is increased.

Government policy continues blindly to denude the economy of resources which could - under decent management - improve the future prospects of the nation.

Saturday, 11 October 2014

It is now permissible in the UK to become engaged in a debate as to whether the mass migration of mostly-young, willing workers from the EU has reduced both the job prospects and the wages of native British workers.

The other immigration issue remains one for whispered conversations and low-keen chatter in pubs. This is the issue of non-white immigration, and within that the particular situation of the benefits system. There is a suggestion that the people who issue benefits share with the South Yorkkshire Police - and many other forces - a paranoia of being classified as 'racist'. Hence it is understood that in many towns and cities first, second and even third generation benefit dependents are able to make their claims and receive payments all in their alien native language: the public administration system is said to be franchised out to the immigrant community; with a licence to be less rigourous in assessing claims than are those dealing with native white Britons.

Furthermore, it is a matter of observation that many urban MPs - most of them Labour - spend a huge amount of their surgery time and administrative effort on non-EU immigration cases.

This is all alienating the descendents of the former working class. They are no longer vote fodder for the Labour machine. It is impossible to assess where this will go: but there is a risk that Labour could become the party of non-white minorities.

For most of those alienated people, voting Tory is impossible. The Thatcherite destruction of industries and of employment, combined with policies seen as largely antisocial, have created a spectral vision of the Tories that would take several more generations to remove. David Cameron's accent - combined with Gideon's sneer - maintains the barrier.

Clegg has shot the credibility of his party to pieces. The greens offer declining living standards and unaffordable electricity.

Nobody knows what UKIP offer: they have no economic policy to speak of. But they do offer a vote on the EU; and they do not totally avoid talking about immigration. That is enough to made them 'different': better, perhaps, than the establishment devils that you do know have let you down.

Friday, 10 October 2014

Labour has held the parliamentary seat of Heywood & Middleton, located historically in Lancashire.
I grew up in Lancashire, in the last days of powerful working-class protestant Toryisn. The Borough of Darwen, before its incorporation into Blackburn, was pretty solidly Tory because it was working class and protestant. Nobody works as hard, or as repetitiously, now as the majority of men and women did only fifty years ago. Darwen parish registers show whole pages of marriages between men who are described as 'Collier' and women who are either 'Weaver' or 'Spinner' [to differentiate workers in spinning mills from soft southern non-employed women who could be decribed as 'Spinsters'. The working class that I knew has effectively been abolished. Similarly the identification of more than 80% of the population as affilliates of this or that chrch or chapel is absolutely a thing of the past, with Muslims the largest active religious group.

From the 1950 General Election until now the slowly-declining Tory party competed with Labour - which first emerged as a credible party of government only in 1945 - to bribe the electorate with competing packages of handouts. Thus the two parties divided office between themselves over the years: until the stalemate that resulted from the General Election of 2010,

Since 2010 the awfulness of both 'major' parties [and the unspeakable shuffling of the LibDems] brought disillusion with politics to a new peak. Labour and Conservatives are both planning to run their next election campaign on the basis of what they can give away; mitigated by scarcely-credible 'plans' to pay for the handouts. The phenomenon of 'economic growth' means an increase in total spending in the economy: Osborne has achieved the fastest growth in the developed world simply by increasing government spending and borrowing, and mainintaining conditions in which people individually borrow ever more [both for house purchases and lifestyle spending]. To compound those follies the balance-of-payments remain seriously in deficit, adding external debt to the burden that has fallen on the state.

If a vote for 'none of the above' could make a significant difference to politics, people would take it. Now it looks as if UKIP is better than nothing. But they are not just attracting protest votes: they are tapping again the deep roots of working-class conservatism, and also at the roots of pristine Disraelian conservatism. The cross-party politician Winston Churchill was anything but a Little Englander: he offered union to France in 1940, and looked forward to a European Union. But the true blue Tory would have nothing of Catholic Socialist Europe, and Old Labour were nationalists [as Foreign Secretary in the Attlee government, Earnest Bevin described himself as " friend of the jolly old Empire"]. Ukip much better meets these two traditions than any other party; and its leader's habits chime in wiith both old working-class and true tory behaviour.

The clever spin doctors and professional politicians still think in terms of swing between two establishment parties, with decision being taken on the Manifestos on the basis of handing different packs of goodies to the despised, alien hoi-polloi. Ukip meets a historical trend, which could overwhelm the entire system; just seven months from now.

Thursday, 9 October 2014

Britain's retiring EU Commissioner, Baroness Ashton, has been toe-curlingly embarrassing. The new appointee is a symbol of the arrogance of the political class: a Tory lobbyist who was shunted into the overblown House of Lords has been confirmed as the partial head of Financial Services for the EU for the next quinquennium. The Commission would not trust any Briton with the whole job, so the function has been split into two non-jobs; and the EU Parliament has bought into that.

Now the Europeans are busily saying that the financial services must be spread around Europe, to the detriment of London. This completely ignores the basic truth that London is - and has been for at least 250 years - a totally different sort of marketplace in financial services from those in Paris, Vienna and Rome.

This is exemplified most clearly in the insurance market. Both Lloyds and the London-market companies accept business from all over the world. They will price emergent risks of which there is no quantifiable history on the basis of well-honed judgement of a quality that has never been equalled anywhere else: and they are almost always right. There are, from time to time and rarely, egregious mistakes made. The biggest recent one was in a London office of AIG [formerly the greatest of American Insurers] when they accepted hundreds of billions of dollarsworth of bankers' risk against a new form of contract that was untested: and it brought down the whole company, which was then 'rescued' by the US government because the collapse of the American International Group would have made the US economy unsustainable.

Only London can manage such risks, and only in London is there a subscription system whereby most new and many well-known risks are only accepted by the Market on the basis that the risk is carried on the balance sheets of a consortium of experienced, intelligent underwriters who all have to agree before the contract can be completed. If the contracts that AIG concentrated on its own balance sheet had been offered to the subscription system, they would never have been accepted. It would be lunatic to think that a subscription market could be created involving underwriters in twenty-six financial capitals. Smashing London's 'monopoly' would not spread the market around Europe: it would just deprive the world of a market that has been developing and adapting to change [and increasing its access to capital] since 1670.

The same truth applies to the innovative areas of finance that are misguidedly called 'banking' [or damned as 'casino banking']. Derivatives, in particular, have been developed in London and New York - and copied worldwide - because they are very useful, and they work. Managing such contracts, and developing new variants, is a London speciality. It earns good wages and bonuses for the experts who work in the market, profits for the companies that finance them, and taxes for the British government. There are no losers: but envious Europeans feel that they are deprived of a 'fair share' of the business. The business is open to them: they can just enter the London Market [and some have done so]. But many continentals want the protection of their own governments, their own central banks and their own regulators; they want to play by rules that do not permit the innovation that is common in London. The big rewards come from carefully-calculated expert risk-taking, which is available only in London and [now to a lesser extent, due to regulatory changes since the crunch] in New York.

Derivatives have not failed: it was bad old-fashioned moneylending, especially on property, that brought down banks in 2007-9. This simple fact creates furious jealousy in non-London financial services as regulatory screws are tightened and the prospects of profitability are reduced. The EU has power to kill London's unique capability. It cannot be spread around: it is the very fact of concentration in the single market place that gives it that combination of strength and flexibility that the cretins want to tear apart. The wet, half-comprehending political caste state - but understate - this problem. The threat is urgent. It is a national issue. We need a popular campaign to save London - now!

Monday, 6 October 2014

Trust Boris to pick up a sensible idea and run with it! He is about the best publicist in the country, but his image as a Bullingdon Buffoon mitigates his effectiveness very significantly. Hence his piece in today's Daily Telegraph may have less of a positive impact that it should. One advantage of his publishing it today is that it provides a sensible alternative to the wishful fancies of the Libdems in Glasgow.

The idea is that which the late Barbara Castle believed had been implemented by the 1945 Labour Government; and thereafter betrayed by governments of all parties. This was the idea that National Insurance pensions contributions would be accrued by the government in a massive fund that could be used to finance the development of the economy: and the profits of that investment would amply fund the pensions to which the insureds became eligible in old age. As I mentioned last week, the National Health Service was so well-used from day one that that the fund was quickly exhausted and had to be topped up from general taxation to keep healthcare solvent; pensions continued to be paid out of taxes. In old age, Barbara continued to lament this despoliation; and to argue that the British people had been robbed.

Boris's idea of the day is that pension contributions, at least those of the higher-paid who do not fall within the new state scheme, could go into a Grand National Consolidated Investment Fund [not his terminology] that would develop the infrastructure that has been listed by Gideon Osborne but not significantly addressed, which would produce returns from which future pensions could be paid. Good idea!

But politicians cannot be trusted any more now that in the nineteen-fifties, sixties, seventies, eighties or nineties: most people would say that present crop are even less trustworthy that the likes of Sunny Jim Callaghan, Enoch Powell and Grocer Heath [all of whom had very creditable service records in World War II]. What chance would there be of the Fund being allowed to fructify under proper management? Who would be the managers? Assuming that the Treasury would have a final say on the job-specs, the people-specs and the individual 'suitability' assessment of nominees, what chance is there of effective and independent Trustees being appointed? And, above all, what chance would there be of the Fund not being raided by a hard-up government?

I suggested in a recent blog that people should be issued with free bonds in lieu of the tax cuts that the country certainly can not afford at this time, allowing that money to be directed by the government into productive investments. Those investments could yield profits that could enable pay-outs to be made to the bondholders; following the principle of post-war credits that were issued during World War II [but not properly honoured, later]. But, of course, the Curse of Castle could apply to such a Fund - just as I suggest above would occur with Boris's Grand National Consolidated Investment Fund.

There must be a way of appointing managers who would be competent, honest and genuinely independent of government: I must put my best thinking-cap on!

Saturday, 4 October 2014

Even before their conference begins, the Liberal Democrats have begun to set out spending plans in excess of the present level of state overspending. So now all the 'conventional' parties have demonstrated that they have learned nothing from the nation's experience over two generations.

The Guardian - which the BBC always calls "The Guardian Newspaper" to assert the pinko delusion that it is capable of objectivity - has already declared that although there is a general view among the electorate that the Lib-Dems face wipe-out in the coming General Election the nation really needs this parcel of deluded verbalisers as an integral part of political life.

In order to get a whif of office, they ditched their solemnly signed promise on student fees; and thereby alienated a generation of potential supporters. Then in office they have achieved nothing of significance: and a lot to foster the general disillusion with politics and politicians:-
* Clegg produced a proposal to reform the House of Lords that was so sublimely silly that it was killed quickly; thus ensuring that the hereditary peers will survive into the next Parliament and that small rotten boroughs - especially in Scotland - will continue to be over-represented in the Commons.
* Cable - the one star in the party - has said a lot of good things and achieved spectacularly little at the dear old Board of Trade.
* Hughes stayed out of office until the very last moment, when he recognised that he'd never be a minister unless he joined in; then he became a totally conventional law officer.
* Alexander served as a loyal number two to Gideon Osborne: enough said!
* The other one to head a major ministry, the Energy Secretary whose name and picture remain unknown to the general population, managed to avoid the major investment that was needed to compensate for the over-hasty commitment of the Blair-Brown governments to shut down coal-fired power stations. From the depths of recession until the development of the looming public-spending squeeze he piled agony on consumers - now and in future generations - by taxing energy supplies with generous subsidies to the operators of inefficient and unnecessary windmills.

The Liberal Democrats deserve what is coming to them in the election: it will give the depressed voters the one thing that they can gloat about!

Thursday, 2 October 2014

Next week the Liberal Democrat Conference will be reported extensively in the Guardian and given polite but cynical coverage from most of the rest of the British media; but now that the Tories have gone back to work the putative electoral promises made by the major parties are clear.

They are deeply depressing. They represent mainstream politics as it has dragged down Britain since the 1951 election. The parties are competing to offer different kinds of handout to those who they reckon are most likely to vote for them.

Yesterday the Tories specifically promised £7 billion of tax cuts which are obviously unfunded, and it is difficult to believe that the national budget can afford the additional spending that they promise to make on the National Health Service. These additions to the 'spending' side of the national finances sit alongside the Chancellor of the Exchequer's implicit promise to cut public spending across the board by another £30 billion. It is not at all clear what public services can be maintained, even in an exiguous form, after such a savage pruning. Public life and social services can only become more nasty and brutish under such a regime: and the preordained failure of the nonsense about the 'big society' means that the Tories can not pretend in the next election that voluntary social action can compensate for the withdrawal of public services.

Labour has done no better: they too talk about reducing the government's annual overspend while promising that both the state [insofar as it will continue to be an employer and a donor of benefits] and private employers will have to pay their staff more with no hint that their productivity will be increased. If productivity genuinely increases in line with pay awards, there will be fewer jobs available from a given fund in the employer's budget: unemployment must increase.

Whoever wins the 2015 election will be the real loser. The economy has not got the resilience to afford the handouts promised by either leading party. The deficit will grow and the creditworthiness of the country will decline [whether in or out of the EU] so the terms on which the government can borrow will become punitive; with the consequence that enforced spending cuts will be massive and arbitrary.

Can nothing be done?

Not by the present crop of politicians working within their current context and mindset.

If politics could change, how should policy change?

The country should follow German experience, and create a Grand Coalition of the major parties, Instead of cash giveaways to individuals the government should give the people who work bonds in a National Development Fund, to become negotiable when the economy has been recalibrated. This would be a development of the Post-War Credits that were issued to people during the Second World War. The allocation of bonds should broadly reflect the individual's input of effort to the implementation of the National Plan. Billions of poundsworth of housing and infrastructure projects can be 'shovel ready' within weeks: while thousands of entrepreneurial businesses can be enabled to access capital to fund their growth. All that is needed are the wit and the will to do these things.

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About Me

I have had a very fortunate life, in that I have been able to study the economy and Economics for more than forty years. I taught Economics, the History of Economic Thought and some Economic History at University level for over twenty years; I was CEO of an international professional Institute in financial services for more than a decade; served as head of a large Business School and have been Pro-Vice-Chancellor of a major university; and I have lectured and examined all over the world. My introductory text on insurance was translated into fourteen languages and my writings over a wide range of topics have been available worldwide.

Throughout these years I have quietly challenged the normative assumptions that underlie academic Economics; but for decades I recognised that the hegemony of dogma was so impenetrable that any frontal assault on the self-styled ‘profession’ would be brushed aside by the professoriate that had been appointed in a pyramid of patronage. Now – through the credit crunch and the even more grave sovereign debt crisis – it is very widely recognised that Economics is a failed subject: it fails to provide any adequate analysis of the situation or any new programme for moving the economy forward. The time has come for the world to understand how fundamental the failings of Economics are.

Fortunately we can begin to move forward in understanding by restating principles that were developed before Economics was set out in its modern form in the eighteen-seventies. A sound understanding of the economy begins in the recognition that all decisions and actions in the economy are taken by human individuals, acting on their own or as the agents of corporate persons [companies, registered charities etc] or as servants of international sovereign persons that are known as states [and their governments, local authorities and state agencies].

Persons are not impotent incidents in markets: markets are the creations of persons and any market can be abused or upset by persons with unusual ambition, drive, inspiration or dishonesty. This approach is followed in my simple little book, Personal Political Economy: follow the link.

In this blog I make comments on people and events from the perspective that is set out in the book: and I will not hesitate to repudiate any portion of the book – or any blog – that is invalidated by emergent reality.I thrive on criticism, and welcome it.